Carst And Walker

Distell toasts giddy gin, brandy and Bernini sales

Tipplers across the globe have been turning to gin and South Africa is no exception, with craft distilleries popping up all over. This trend has benefitted wine and spirits group Distell, which sold 21% more gin in the first half of its financial year.

Brandy sales also did well, with volume growth of 14%.

Distell says domestic market revenue increased by 8.2% in the six months to December and sales volumes rose by 2.9%, despite a suppressed consumer environment and sustained competitor activity.

Its spirits and ready-to-drink portfolios delivered strong revenue and volume growth while the wine portfolio grew revenue 4.5% due as consumers traded up to its premium wine from mainstream brands.

Mainstream wine growth was muted by increased competition and a “trading up” trend, said Distell CEO, Richard Rushton. He said Distell’s premium wines — including Nederburg, Durbanville Hills and Fleur du Cap — showed strong growth.

Rushton reported that Distell’s premium RTD (ready-to-drink) range of beverages continued to perform well with grape-based brand Bernini managing a 41% volume gain and a 55% surge in value.

“Bernini is SA’s fastest growing grape RTD,” he noted.

On global markets, Rushton said that liqueur Amarula was growing in its top five markets, and in addition there was market share growth in 17 international markets for South African bottled export wines.

Outside of South Africa, the inclusion of KWA Holdings East Africa in Kenya to its Rest-of-Africa business contributed to revenue growth of 18.5% as sales volumes rose 6.6%. It says focus markets on the continent including Namibia, Botswana, Kenya, Zambia and Zimbabwe all recorded strong growth, but trading conditions were challenging in Mozambique and Nigeria.

International markets outside of Africa grew volumes by 6.7% and revenue by 9.4% as increased local investment in the UK was impacted by the effects of a stronger rand and a less favourable sales mix. Travel Retail grew sales by 43.2%.

Total revenue for the period rose 9.3% to R13.4-billion and operating profit jumped 15% to R1.8-billion.

Normalised operating profit increased by 6.5% and was up 4.4% excluding pro forma foreign currency translation movements. Headline earnings, including its discontinued operations, fell by 5.1% to R1.1 billion and headline earnings per share on the same basis were down 5.1% at 509.2c.

The group was negatively affected by one-off losses and impairments of R85.9-million following a sachet ban and excise duty dispute which impacted the performance of Tanzania Distilleries Limited, in which it holds a 35% interest. Excluding that ad the currency conversion movements, headline earnings were 3.2% higher. It’s maintained its dividend at 165c per share.

It says while the drought in the Western Cape poses a real risk to the supply of grapes and wine in the medium term, it has secured enough supply for the current cycle and has invested R22-million in waste-water treatment and reuse programmes to mitigate against further supply risk.

It says a restructuring, which will result in a new entity, Distell Group Holdings, being listed on the JSE, should be completed in April. The restructuring is aimed at simplifying its multi-tiered ownership structure.

Source: INCE|Connect Community News; BusinessLive.co.za

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